Common mortgage pitfalls to avoid

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December 02, 2014David Thomas

With hundreds of home loan products on the market and Australia’s lenders competing aggressively for market share, you would be forgiven for finding the whole home loan process a little bit overwhelming and confusing.

Indeed, many potential borrowers find the home buying experience confusing, which leads them to make some common mistakes, including:

Failure to research

Savvy mortgage choices are made by researching different types of lenders, home loan types and the range of features available, as well as the documentation you will need to apply for a loan and what paperwork is involved.

As your local mortgage broker, I can work with you to find the right home loan solution for your needs. With access to hundreds of home loan products from our panel of 28 lenders, you can be assured of finding a home loan solution that is right for you both now and into the future.

Failure to budget accordingly

Without a budget, how will you know if you can stick to one once you have a mortgage? A budget helps you monitor spending and determine what mortgage repayments you can service. Furthermore, a good budget can help you when it comes time to apply for a home loan. Banks favour borrowers who can show they have genuine savings and can easily service their mortgage repayments.

Forgetting pre-approval

A loan pre-approval, which generally lasts for three to six months, provides assurance as to what you can borrow before you go property hunting. It is a terrible feeling to have your heart set on a property and find out you can’t borrow enough money to buy it. Pre-approvals also help at auction, when you usually have to pay a deposit on the spot if you are successful.

I can help you source pre-approval so that you can go property shopping with confidence.

Taking rates on face value

Many people fail to look past their honeymoon (introductory) period, which is when the interest rate on their mortgage is lower than it will be for the remaining loan term. If it hasn’t been budgeted for, you could be in for a shock. A clever move is to make mortgage repayments as if the honeymoon period doesn’t exist, so you’re prepared for its completion and ahead on your payments.

Paying for unnecessary extras

Have you ever had a friend, colleague or family member tell you about the home loan features you “absolutely must have”? If so, you are not alone. A lot of borrowers will choose a home loan because of the features it boasts, simply because they have heard that feature is handy to have. The reality is, additional home loan features sometimes come at an additional cost and every borrower’s situation is different, so what home loan feature may work for your friend, may not work for you.

For further information, and to put yourself in the best position with valuable information and guidance, contact a trusted consultant from Mortgage Choice on 07 3286 7711.

Contact us today.

Name*: Sam Smith

Email*: samsmith_mc@gmail.com

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At Mortgage Choice, we're about helping people make better choices with their finances because we believe that making better choices leads to a better life. We do this via a national network of franchisees, including professional mortgage brokers and financial advisers. They are committed to empowering customers by sharing their expertise and offering solutions that are personalised to customers' individual circumstances.

The information provided on this website is for general education purposes only and is not intended to constitute specialist or personal advice. This website has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should consider the appropriateness of the advice to your own situation and needs before taking any action. It should not be relied upon for the purposes of entering into any legal or financial commitments. Specific investment advice should be obtained from a suitably qualified professional before adopting any investment strategy. If any financial product has been mentioned, you should obtain and read a copy of the relevant Product Disclosure Statement and consider the information contained within that Statement with regard to your personal circumstances, before making any decision about whether to acquire the product. You can obtain a copy of the PDS by emailing homeloans@mortgagechoice.com.au or by calling 13 77 62. *Note: the home loan with the lowest current interest rate is not necessarily the most suitable for your circumstances, you may not qualify for that particular product, and not all products are available in all states and territories.#The comparison rate provided is based on a loan amount of $150,000 and a term of 25 years. WARNING: This Comparison Rate applies only to the example or examples given. Different amounts and terms will result in different Comparison Rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the Comparison Rate but may influence the cost of the loan.~Not all brokers or advisers offer the products of all lenders or solution providers.^Closes 1/4/2019 Draw 1300 hours AEST on 3 April 2019 at the offices of Engage Australia Level 8, 56 Clarence Street, Sydney, NSW 2000 Winner will be notified on 3 April by email. Authorised under permit numbers NSW LTPS/18/29986, ACT TP 18/02299, SA T17/2318, LTPS/196/10297. Full T&Cs click here.**Source: Comparator, a CoreLogic business for the September 2019 quarter